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Keywords

jurisdictionattorneylawyerduty of loyaltydeclaratory judgment
jurisdictionlitigationattorneylawyercompliancerespondent

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In re Rules of Professional Conduct and Insurer Imposed Billing Rules and Procedures, 299 Mont. 321, 2 P.3d 806, 2000 MT 110

Facts

Petitioners, defense counsel appointed by insurers, sought a declaratory judgment regarding the legality of insurer-imposed billing and practice rules. They argued that these rules violated the Rules of Professional Conduct by limiting their representation of the insured. The court accepted original jurisdiction and considered whether attorneys could agree to such rules and whether they could disclose detailed descriptions of services without the insured's consent.

In June, 1985 we adopted the Rules of Professional Conduct “as rules governing the conduct of persons admitted to practice law before this Court and all state courts in the State of Montana.” In November, 1998 Petitioners filed an application for original jurisdiction and declaratory relief. Petitioners requested a declaratory ruling on two issues: 1. May an attorney licensed to practice law in Montana, or admitted pro hac vice, agree to abide by an insurer's billing and practice rules which impose conditions limiting or directing the scope and extent of the representation of his or her client, the insured? 2. May an attorney be required to submit detailed descriptions of professional services to outside persons or entities without first obtaining the informed consent of his or her client and do so without violating client confidentiality?

Issue

1. May an attorney agree to abide by an insurer's billing and practice rules that limit the representation of the insured? 2. May an attorney be required to submit detailed descriptions of professional services to outside entities without the informed consent of the insured?

1. May an attorney licensed to practice law in Montana, or admitted pro hac vice, agree to abide by an insurer's billing and practice rules which impose conditions limiting or directing the scope and extent of the representation of his or her client, the insured? 2. May an attorney licensed to practice law in Montana, or admitted pro hac vice, be required to submit detailed descriptions of professional services to outside persons or entities without first obtaining the informed consent of his or her client and do so without violating client confidentiality?

Rule

The Rules of Professional Conduct require that a lawyer provide competent representation, exercise independent professional judgment, and not allow third parties to interfere with the lawyer-client relationship.

Rule 1.1 provides: “Competence . A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” Rule 1.1, M.R.Prof.Conduct . Rule 1.8 provides in pertinent part: Conflict of Interest, Prohibited Transactions …. (f) A lawyer shall not accept compensation for representing a client from one other than the client unless: (1) the client consents after consultation; (2) there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship ; and (3) information relating to representation of a client is protected as required by Rule 1.6 .

Analysis

The court analyzed the insurer's billing and practice rules and determined that they imposed conditions that limited the scope of representation and interfered with the defense counsel's independent judgment. The court emphasized that the insured is the sole client of defense counsel, and any requirement for prior approval from the insurer fundamentally undermines the attorney's duty of loyalty to the insured.

We conclude that Respondents have misconstrued our past decisions. This Court has not held that under the Rules of Professional Conduct, an insurer and an insured are co-clients of defense counsel. The Montana decisions chiefly relied upon by Respondents are inapposite because each one concerns situations where the insurer had “absolute” control of the litigation. None of the Montana decisions cited by Respondents addresses whether an insurer is a co-client under the Rules of Professional Conduct.

Conclusion

The court concluded that the insurer is not a co-client of defense counsel and that the insurer's billing rules violate the Rules of Professional Conduct. A declaratory judgment was entered in favor of the Petitioners.

We hold that under the Rules of Professional Conduct, the insured is the sole client of defense counsel.

Who won?

Petitioners (defense counsel) prevailed because the court ruled that the insurer's billing and practice rules violated the Rules of Professional Conduct, affirming that the insured is the sole client of defense counsel.

Petitioners clearly have a personal stake in the issue whether their compliance with insurers' billing and practice rules violates the Rules of Professional Conduct.

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